Wembley project burns a hole in Australian company Multiplex’s pockets

MELBOURNE: Australia’s Multiplex Ltd., which is redeveloping Wembley stadium in London, posted a less-than projected profit of A$148.1 million before inter-group accounting transfers for the year ending 30 June up from A$119.8 million for the corresponding previous year.

Profit after the distributions on its SITES hybrid securities was A$132.7 million, against analysts’ projection of $140.7 million.

The company cut its 2006 forecast by 8.5 per cent and made a provision of A$8.6 million on its A$1.2 billion stadium project for fear of running into delays or cost hikes.

Describing the Wembley project as its only remaining loss-making construction project, the company’s chief executive Andrew Roberts said the result is very disappointing and the main cause has been the losses at Wembley. He said: “We had never had an experience where we’ve seen a cost movement like we’ve seen in relation to this project, and we’ve been in the business for 40 years.”

Roberts said despite the losses, the project is very much on track and the company would complete the stadium in time for the March 2006 FA Cup final. The company said it incurred a total loss of A$50 million after tax on Wembley while the development and construction unit had a net loss of A$17 million.

The company had reinforced its bottomline spending A$2.3 billion in November last year to buy office building owner Ronin Property Group and some assets of U.K. property company Chelsfied. This increased its rental income and helped it to offset the losses in the construction unit.

Multiplex said the problem at Wembley has been mainly on account of delays and cost overruns. It needed an extra A$8.6 million to complete the project on time. The project has already cost the company its founder and executive chairman John Roberts, who resigned earlier this year.